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With its announcement yesterday of a doubling in first-quarter losses, and a deep dip in sales, Sears Canada Inc. is, to paraphrase the song, a few days older and closer to death.

Sears Canada says that its survival is in doubt, liquidity having dried up. The firm is able to borrow a mere $109 million (Cdn.) or so on its real estate holdings to finance continuing operations, far short of the $175 million it was counting on.

Sears Canada has effectively put itself up for sale, consistent with the asset-dumping by which Chicago-based parent Sears Holdings Corp. has been trying to stay afloat.

The challenge for Eddie Lampert, longtime controlling shareholder of Sears Holdings, is the scarcity of potential buyers for Sears Canada. The Canadian branch plant has lost $406.7 million over the past three years.

True, Hudson’s Bay Co. (HBC), also controlled by New York money, might be interested. HBC has been a rumoured buyer this year for the troubled department-store retailers Macy’s Inc. and Neiman Marcus Group Inc.

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But HBC is mired in its own world of worries. Its shockingly bad quarterly results released last week are a culmination of several years of losses.

HBC and Sears Canada are hardly alone in their fate.

Over the past five years, the biggest remaining North American department store chains have, on average, lost 46 per cent of their shareholder value.

Sears Holdings is a special case. The value of its stock has been almost entirely wiped out, down 97 per cent from its 2007 high of $191 (U.S.). And Sears Canada has been reduced to a penny stock. At a current price of 87 cents (Cdn.), its stock is down about 99 per cent from its $40 peak.

Lampert, 55, has resorted to fire-selling assets. He has shed specialty retailer Land’s End; the renowned Craftsman line of tools; and 235 properties spun off into a real-estate investment trust (REIT).

But none of that effort has restored health to the 113-year-old erstwhile Sears, Roebuck & Co., founded the same year the Statue of Liberty was dedicated. In March, Sears Holdings announced a $2-billion (U.S.) loss for 2016, and said there is “substantial doubt” it can much longer stay in business.

Times change, but entrenched business models seldom change with them.

The department-store chains are losing their remaining customers to the savviest e-commerce merchants.

E-commerce has been the dominant trend in retailing for years. Yet it would flatter department stores to say they’ve merely failed to catch up. They haven’t even really tried to gain mastery of e-commerce, unable to shake themselves from the model of displaying merchandise in bricks-and-mortar caverns that was pioneered by New York merchant A.T. Stewart in 1848.

To be sure, most of the general-merchandise palaces that every great city could once boast have disappeared, including Philadelphia’s Wanamaker, Boston’s Filene’s, Chicago’s Marshall Fields and Carson, Pirie, Scott and Detroit’s J.L. Hudson. T. Eaton Co., which commanded roughly half of all Canadian retail sales in the 1950s, pretty much closed the account with the sale of most of its assets in 1999 to Sears Canada.

The few holdouts to oblivion were amalgamated into chains of lookalike stores. Those agglomerations then fell into the hands of financiers like Lampert and the New York real estate experts who control HBC – financial engineers who don’t know how to sell a pair of socks.

As even loyal Sears Canada shoppers know, everything that department stores sell can be found in greater variety and abundance elsewhere, in smaller stores that are easier to shop, and often at lower prices.

E-commerce threatens to be the death of many merchants. Department stores will be first in line. Sears Canada actually managed to forfeit e-commerce sales in its latest quarter by being understocked due to technology glitches.

A healthy “in-stock” position is rule no.1 in retailing. Shoppers who leave a store empty-handed rarely return —just the opposite of the repeat business from satisfied customers that every smart merchant strives for.

You can measure the impact of e-commerce by noting that the combined 2016 revenues of Sears Holdings, Macy’s Inc., J.C. Penney Co. Inc., Kohl’s Corp. and Nordstrom Inc. (which is trying to take itself private) were $32 billion (U.S.) shy of the $135 billion in sales posted by e-commerce giant Amazon.com Inc. alone.

It is unfortunate for Sears Canada’s 16,000 employees that their employer has so few options to keep it in business. And it’s pure chutzpah that Eddie Lampert, who hasn’t let go of Sears Holdings despite showing no talent in turning it around, still moonlights as a New York hedge-fund manager.

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